CBOT July soybeans closed up 11 1/4 cents at USD9.46 1/4 a bushel; July soyoil closed up 0.15 cents at 36.90; CBOT July soymeal rose USD7.40 to USD289.70; China bought 40,000 MT of US soyoil overnight, which was supportive. However rumours persist of shipment cancellations from South America. Wet weather in the US is starting to raise some worries that maybe all the intended soy acres won't get planted.

Corn

July corn ended up 6 1/4 cents at USD.49 1/2; Dec corn closed up 6 1/2 cents at USD3.71. China was back buying US corn today, booking three cargoes of US corn for June/October delivery according to media reports. The USDA surprisingly cut ending stocks for 2009/10 and 2010/11 by much more than was anticipated yesterday. Demand from the ethanol sector was increased by 150 million bushels for old crop and 100 million for new crop.

Wheat

CBOT July wheat closed up 7 1/2 cents at USD4.40 3/4 a bushel; KCBT July wheat jumped 4 1/2 cents to USD4.67; MGE July wheat ended up 11 1/2 cents at USD5.01 3/4. Appallingly wet weather means that the western Canadian seeded area for all wheat will be the smallest since 1971, according to the Canadian Wheat Board. Some farmers have taken to planting wheat by plane, underfoot conditions are so bad. In total, between 8.25 million and 12.5 million acres of farmland will go unseeded across the Prairies, the CWB said.

US retail sales for May, just released, were disappointing at down 1.4%.

Crude oil is weaker on the back of that, currently down a dollar and a half, which will cap any likely gains this afternoon.

China is back buying US corn today, which should make that the strongest leg of the grains at the opening coming on the back of the USDA's larger than expected cuts in old and new crop ending stocks yesterday.

COFCO bought three cargoes of US corn for June/October delivery according to media reports.

This season's Chinese corn crop is not off to the greatest of starts, with plantings delayed by up to three weeks, and rains eagerly needed.

China also bought 40,000 MT of US soyoil, the second such purchase this week.

With the news yesterday that China's exports grew by 48.5% in May year-on-year, it would seem that China's appetite for grains and vegoils is continuing unabated by the global recession.

The country's recent activity in the markets would appear to suggest that corn stocks are nowhere near as great as official estimates show. The ongoing dispute with Argentina would also seem to indicate that US soybean, and now soyoil, exports might hold up better than expected.

Argentine workers are expected to stage a nationwide strike Monday at grain export terminals across the country in a dispute over wages. Whilst this is only expected to be a one day protest, things could quickly escalate as they frequently do in the Latin American country.

The US weather outlook remains non-threatening. "wet weather will continue across the Corn Belt for the remainder of June. Crop condition reports continue to show an excellent start for the corn crop and there are no indications of extreme heat or drying," say QT Weather.

Early calls for this afternoon's CBOT session: Beans flat to down 2 cents; corn mixed; wheat down 2 to 3 cents.

They've been ringing for long enough, and they're starting to get louder. China appears to have now auctioned off almost all of it's temporary corn reserves, and is now eating into it's more precious long-term strategic reserves.

Auctioning off around a million tonnes of corn a week, as the government have been doing recently, appears to have cooled rising prices for now. How long can they, and will they be prepared to, keep digging into these stocks?

To accurately answer that one, it would be helpful if we knew exactly how large they were (and also importantly what condition they were in). Unfortunately we don't, and those that do can't be relied upon to pass the information on accurately.

It seems fairly widely accepted that the Chinese did not in fact harvest more than 163 MMT of corn last year as the state-sponsored CNGOIC embarrassingly still insist. Some private estimates are as low as 136 MMT, maybe a "fat finger" was responsible?

Whatever, actions speak louder than words, and the sudden arrival of China on the corn import scene seems a clear indicator that production was indeed significantly reduced last year.

So how big are China's corn reserves now? The USDA have them down to finish the current marketing year with 53 MMT, although they still have them down as having produced 155 MMT last year. Some private estimates peg the corn strategic reserve at less than 20 MMT.

With questions already now being raised over the size and delayed nature of this season's corn plantings, how low will the Chinese government let their real reserves get in a country that consumes 3 MMT of corn a week?

Meanwhile moisture levels at harvest time last season were very high, meaning that it's highly likely that there could be a few question marks also hanging over the quality of what corn the government do actually have in store.

Talking of actions speaking louder than words it is also interesting, is it not, that China's famously staunch anti-GMO stance has suddenly casually been waved (or is it waived?) to one side?

China's COFCO have just been confirmed as buying a further three cargoes of US corn today.

With US corn plantings completed in a very timely manner, and the crop already well established in beneficial warm and wet growing conditions, it may seem strange to suggest that prices may have bottomed ahead of what is probably going to be a record production year.

Yet the USDA surprised the market yesterday by pegging both old and new crop corn carryout significantly lower than the trade had been expecting.

Old crop ending stocks were forecast at 1.603 billion bushels, 135 million below last months report and 121 million below the average trade guess. The 2010/11 carryout came in at 1.573 billion bushels, 258 million below the 1.831 billion bushel trade estimate.

Demand from the ethanol sector was increased by 150 million bushels for old crop and 100 million for new crop.

Meanwhile companies like ADM are continuing to lobby the Environmental Protection Agency to approve ethanol blends containing up to 12 percent ethanol for all cars, up from the existing 10 percent limit.

The coming 2010/11 season will be a record year in terms of corn consumption, the USDA said yesterday, raising demand by 4 MMT from last month to 831.86 MMT, an increase of almost 19 MMT on this season.

News breaking today suggests that China have been back to buy more US corn this week, as prices in the south of the country continue to be buoyed by lack of domestic availability.

The US Grains Council say that Chinese new crop corn plantings haven't gone as well as expected, and that these are running 15-18 days behind schedule, potentially having a negative impact on final yields. This means that there is still plenty of potential to make further sales to China as government temporary reserve stocks have been exhausted by the recent auctions, they say.

July soybeans closed at USD9.35, down 8 1/2 cents; July soybean meal closed at USD282.30, down USD3.20; July soybean oil closed at 36.75, unchanged. The monthly WASDE report showed estimated 2009/10 soybean ending stocks at 185 million bushels and 2010/11 ending stock projections at 360 million bushels. Both were in line with trade estimates. Negative news however came from China cancelling 250-440,000 MT of South American soybeans that were scheduled for June delivery. Today's export sales report came in a bit better than the trade guess at 420,600 MT for 2009/10 delivery and 130,000 MT for 2010/11 delivery.

Corn

July corn closed at USD3.43 1/4, up 5 cents; Dec corn closed at USD3.64 1/2, up 6 cents. The monthly WASDE report was bullish, pegging 2009/10 corn carryout at 1.603 billion bushels, 135 million below last months report and 121 million below the average trade guess. The 2010/11 carryout came in at 1.573 billion bushels also significantly below the May 1.818 billion bushel estimate. Weekly export sales were 1.018 MMT for 2009/10 delivery, sharply higher than trade estimates and sales for 2010/11 were 143,500 MT.

Wheat

July CBOT wheat closed at USD4.33 1/4, up 5 1/4 cents; July KCBT wheat closed at USD4.62 1/2, up 4 1/2 cents; July MGEX wheat closed at USD4.90 1/4, up 4 cents. The monthly WASDE report increased U.S. 2010/11 wheat production by 24 million bushels (653,000 MT) for all wheat. Weekly export sales for the first week of the 2010/11 marketing year were poor at 118,300 MT. The USDA lowered world 2010/11 wheat production by over 3.5 MMT from last month, and carryout fell by more than 4 MMT. Even so, we aren't exactly in a deficit situation.

EU wheat futures closed flat to mostly higher Thursday. Benchmark November London wheat closed unchanged at GBP100.75/tonne and November Paris wheat was also unchanged at EUR136.75/tonne.

Other London months posted various gains, with nearby July ending GBP2.25/tonne higher at GBP99.00/tonne. Front-month August Paris wheat also closed steadier, up EUR2.00/tonne at EUR130.00/tonne.

The USDA dropped their EU-27 wheat production estimate from 145.07 MMT last month to 142.97 MMT today. UK output was trimmed 300,000 MT to 15.7 MMT, with French production also cut slightly to 39.00 MMT.

Flooding in Poland saw it's estimate cut by more than half a million tonnes to 8.80 MMT, with Hungary also having it's output shaved to 5.10 MMT for similar reasons.

Global wheat production was reduced 3.7 MMT from last month, marking a 11.5 MMT fall from 2009/10.

"Excessive (May) rainfall was particularly unfavourable in Poland, Slovakia, and Hungary. The rains affected the wheat crop, which was in the jointing to flowering stages, and the rapeseed crop, which was primarily in the flowering stage," noted the USDA.

They also reduced their EU-27 rapeseed production estimate by 0.5 MMT from last month to 21.0 MMT.

The recent return to cooler wetter conditions is largely seen by traders as beneficial to the EU wheat crop in western areas. Flooding however is still a major problem in eastern Europe.

In a move that shocked nobody the Bank of England left UK interest rates on hold at 0.5% today. The pound rose to an intra day high of 1.2147 against the euro just after the decision was announced, close to it's best levels against the single currency since November 2008 set earlier in the week.

EU rapeseed prices rose EUR3-4/tonne yesterday and are already up a similar amount this morning in Paris as EU and global production estimates shrink.

Lower production than last season's bumper crop is being forecast in the EU's top two producers France and Germany, whilst heavy flooding is also a cause for concern in Europe's third largest grower - Poland.

Whilst the return to wet and cool conditions has helped EU wheat, it is being seen as detrimental to rapeseed development.

Oil World currently forecast EU-27 output at 20.8 MMT, and note too that production in Ukraine, a key supplier in recent years, is also seen sharply lower for the second consecutive year.

The jury is out on the size of the Chinese crop this year, normally the world's largest producer with estimates ranging from "under 10 MMT" to an official 12.6 MMT, even the latter is a reduction of 7.6% whilst the former would represent a fall in excess of 25% on last year.

Meanwhile over in Canada spring rapeseed planting is struggling to get into the ground and establish in heavy saturated soils. Plantings will probably end up considerably smaller than original expectations of a record acreage, as adverse weather conditions, particularly in Saskatchewan look set to leave large areas unseeded. Growers here have just ten days left before the deadline for crop insurance kicks in.

I've had enough of it already, so I pity the poor sods in Eastern Europe. Thousands have been forced to evacuate their homes in Slovakia as floods "destroyed crops, damaged buildings and cars, and left some residents homeless," according to a report on Reuters this morning.

Earlier in the month there were reports of similar problems in the Czech Republic, Hungary, Poland and Slovakia where a state of emergency has been declared in eastern parts of the country.

"It's basically our (hurricane) Katrina," said one Polish resident in the eastern Polish city of Lublin.

Poland and Hungary had an entire years worth of rainfall in May alone, and the rain has kept falling in June.

July soybeans closed at USD9.43 1/2, up 12 1/2 cents; July soybean meal closed at USD285.50, up USD8.70; July soybean oil closed at 36.75, up 8 points. Private exporters announced the sale of 240,000 MT of beans for 2010/11 delivery to China and 40,000 MT of soybean oil for delivery to them in 2009/10. The USDA release their latest S&D and stocks data estimates tomorrow. They also report on weekly export sales. Estimates range from 100-500,000 MT for soybeans.

July CBOT wheat closed at USD4.28, down 4 ¼ cents; July KCBT wheat closed at USD4.58, down 4 cents; July MGEX wheat closed at USD4.86 1/4, down 3 1/4 cents. The USDA report tomorrow on stocks and production. The average trade estimate for the 2009/10 wheat carryout is 947 million bushels. Winter wheat production is estimated to come in at 1.453 billion bushels. Trade guesses for tomorrow's weekly export sales report range from 150-350,000 MT.

EU wheat ended lower with November London feed wheat down GBP1.00 at GBP100.75/tonne and November Paris milling wheat EUR1 easier at EUR136.75/tonne.

Rain makes grain is what they say, and we've had more of it than you can shake a rainy stick at recently.

In fact we are talking 21.6mm of the wet stuff already this month here in North Yorkshire, comfortably knocking into a cocked hat the entire month of May by almost 5mm already and it's only the 9th of the month.

Northern France also seems to have been blessed with the rainy stick looking at the recent radar images.

Quality is now becoming an issue. This is also a serious potential problem in North America, where protein contents are low in early harvested wheat in Texas and Oklahoma.

Some are already suggesting that overly wet weather in Canada may also lead to low proteins in wheat.

A firmer euro also helped put Paris wheat under a bit of pressure today, with EUR 135 the next support level.

In the UK new crop ex farm values are now under the psychologically important GBP90/tonne level at harvest, which may also inhibit farmer selling.

The overnight grains closed mostly a little steadier with beans up around 2-4c, corn flat and wheat 1-2c higher.

Crude oil is supportive at the best part of USD2/barrel higher, and the dollar is also helping a little being slightly weaker. Inventory data due out later today is expected to show US crude stocks fell last week.

Warm and wet remains the forecast for many parts of the Midwest, great for newly planted corn.

China bought 240,000 MT of new crop soybeans today and also 40,000 MT of old crop soyoil. With the ongoing dispute with Argentina over soyoil seemingly far from over that could prove significant.

The US Senate are expected to vote in the resumption of the blenders tax credit on biodiesel next week too, that would give a further boost to soyoil, and beans as a spin-off.

With the USDA's supply and demand and ending stocks numbers out tomorrow, I think we will see some book-squaring going on today. With beans, corn and wheat all at or close to multi-month lows that could mean a higher close across the board on the grains sector tonight.

Early calls are corn to open mixed; soybeans called 2 to 4 higher; wheat called 1 to 2 higher. I'd be looking for them all to finish higher than that at the close as things stand at the moment, subject to crude oil holding steady.

Abengoa's newly opened wheat to bioethanol plant in Rotterdam isn't expected to be running at close to full capacity until late Q3 of this year, according to my sources.

Meanwhile, the Spanish giant has also joined forces with Total and Abu Dhabi renewable energy company Masdar to build the largest solar power plant in the world. No DDGS will be coming out of there then.

A report on Reuters suggests that the new Ensus plant at Wilton on Teesside is finally approaching full capacity. Frustratingly, just as it gets there it is having to take some enforced downtime as the Environment Agency has set a June 30th deadline to "to eliminate a sickening smell that has plagued residents for weeks" according to another report:

China's so called "think tank" (are they sure that they are spelling the second word correctly?) the CNGOIC say that the country will harvest a record 168 MMT of corn this year. The announcement comes just a couple of days after the Dalian Commodity Exchange assured us that production levels would return to normal this season.

What do they mean "return to normal"? Last season WAS normal according to the CNGOIC, this season must simply be going to be even more normal than normal then I assume.

I imagine that the Chinese equivalent of Derek Ancorah must be in charge at the CNGOIC.

"What over there with the lead piping? Oh missus I've gone all queer, no, no, get down Geronimo I was talking to Fu Man Chu. There skipping happily along the Great Wall of China, but, but there's blood on his hands. What is it Grasshopper, tell me, you must tell me....the people MUST know."

"Erm, he says that this season's corn crop will be 168 million, put that in the book will you lads, I'm off back to my trailer for a lie down."

Chinese corn prices on the Dalian fell slightly overnight on the report, meanwhile cash prices are reportedly around 1,800 yuan in the north to 2,000 yuan in the south. That's around USD260-300.

The Chinese government say they will auction off another 1 MMT of corn in the northeast this week. That auction will include corn from the central reserve, which would appear to indicate that the temporary reserves have now all been sold. It would also appear to suggest that there isn't a lot of stock in the south to sell, hence the large price differential.

CNGOIC say that this season's corn number represents a nice steady modest production increase of 2.5%. Meanwhile, before retiring exhausted to their trailer, they just had enough time left at the ouija board to threw out a prediction of wheat output of 115.1 MMT (a nice steady modest increase), and rice production of 197.34 MMT, amazingly also a nice steady no problems modest increase.

Shock horror though, rapeseed production will fall although not by too much, by 7.6% to 12.6 MMT.

Try picking the reality out of that lot.

Shanghai JC Intelligence said recently that rapeseed production this year may fall below 10 MMT. They said that would be the lowest output since 2007 when production was 8.6 MMT, and down on last season's crop of 11 MMT.

If they're right then that means that the Chinese Clairvoyant Association are overstating this season by more than 25%, even more than last years overstate of around 23%.

Just imagine if ALL Chinese crop production was overstated by 25% as a matter of routine. What a ludicrous notion.

Without a doubt simply has to be Brian, 50% of iconic TV legends The Chuckle Brothers, appearing on the local news last night to confirm that rumours sweeping Facebook and Twitter that he was dead were in fact somewhat exaggerated.

The fact that his act had been dead for at least thirty years seemed lost on the man, although I have to confess to being more than a little relieved it's not true.

Imagine the kerfuffle trying to get that coffin into the crematorium, to me, to you etc.

July soybeans closed at USD9.31, down 4 cents; July soybean meal closed at USD276.80, down USD1.90; July soybean oil closed at 36.67, up 20 points. on Thursday the USDA will release their monthly supply/demand report. The average trade guess for soybean ending stocks is 184 million bushels for 2009/10 beans and 359 million bushels for the 2010/11 ending stocks. Wet weather for the coming weeks may hinder soybean planting, underpinning potential losses until the remaining 16% of the crop is planted.

Corn

July corn closed at USD3.37 1/4, up 1 1/2 cents; Dec corn closed at USD3.56 1/2, up 1 1/2 cents. Nothing too exciting is likely to be on the cards ahead of Thursday's USDA report. Trade estimates average 1.724 billion bushel for the 2009/10 corn carryout and 1.831 for the 2010/11 carryout. It still looks likely that we will see some element of profit-taking ahead of Thursday I'd say, so we can maybe expect a modestly higher close tomorrow. US weather conditions look good for potential corn yields at this stage.

Wheat

July CBOT wheat closed at USD4.32 1/4, unchanged; July KCBT wheat closed at USD4.62, unchanged; July MGEX Wheat closed at USD4.89 1/2, up 2 3/4 cents. Analysts are projecting wheat ending stocks at 947 million bushels for 2009/10 and 987 million bushels for 2010/11 in Thursday's USDA supply & demand report. US all wheat production is expected at 2.054 billion bushels, up slightly on last months 2.043 billion. Whilst the US winter wheat harvest is going well so far in southern states, Kansas is the big one and there are some pretty valid concerns over yields there which yet stand to be confirmed or otherwise.

EU wheat closed mixed with November London feed wheat GBP0.50 higher at GBP101.75 and November Paris milling wheat down EUR1.50 at EUR137.75/tonne.

A weak sterling helped London wheat edge higher, whilst a firmer euro (for once) had Paris wheat on the defensive.

The trade is largely treading water ahead of Thursday's upcoming USDA supply & demand and stocks report, not that any great surprises are likely to be in store for wheat.

With EU prices having fallen sharply in the past couple of weeks since welcome rains arrived in late May, a bit of consolidation also seems in order, at least until we get a clearer idea on yields for the upcoming harvest.

Whilst Black Sea producers will inevitably be keen sellers again once the harvest is underway, there are question marks hanging over output in Russia, Ukraine and Kazakhstan.

Winterkill seems to have been a serious issue in the two first named, whilst spring wheat has been dry seeded in the latter with little rain and temperatures soaring into the upper 30's and low 40's over the weekend.

The overnight grains closed mixed with beans a cent or so either side, corn flat to 1 1/4 lower and wheat a cent or so higher.

There isn't too much change in the dollar or crude oil so far today either.

The US weather outlook is warm and wet for the next couple of weeks, ideal growing conditions for corn although not fantastic for getting the last 16% of soybeans planted.

Good/excellent crop conditions were 76% for corn and 75% for soybeans in last nights ratings. Winter wheat conditions declined again in Kansas, causing a degree of concern.

The Argy harvest is winding down, with soybeans 95% done and corn 79% cut. Wheat planting is underway there, and in Brazil although progress there is slow.

We might start to see some short-covering and profit-taking ahead of Thursday's USDA report. That is expected to show old crop corn, soybean and wheat stocks all declining slightly from last months estimates.

Japan is in the market for 151,000 MT of wheat this week of which 101,000 MT will be US origin.

Before poor old El Nino has hardly had time to pack his bags, meteorologists are warning us that we are switching suddenly and dramatically to La Nina.

What's the difference?

La Nina is typified by a sharp cooling along the equator in the Eastern Pacific, according to Gail Martell of Martell Crop Projections.

"Chilling seas in the Eastern tropical Pacific are linked to a massive shift in the global wind circulation that reverses air pressure and rainfall patterns at opposite ends of the Pacific Basin. When La Nina is in effect, the climate becomes very dry in Argentina, while southeastern Australia benefits from heavy rain," says Gail.

The recent El Nino was effectively responsible for the heavy rains that brought Argentina's nigh on two year drought to an end, and with it bumper soybean and corn production. It was also said to be at least partly responsible for the poor monsoon season in India last summer.

La Nina also typically brings hot and dry conditions to the US Midwest, although the timing of the arrival of these can vary significantly. La Nina will develop there sometime between June and August this summer, according to the US National Weather Service’s Climate Prediction Centre.

Hands up all those old enough to remember the summer of 1988? The drought in the Midwest was on the news every night here in the UK that year, and soymeal prices shot from around GBP140 (which was "normal" then) to GBP270 in quite a short timeframe.

The crucial difference between now and 1988 however was that El Nino bombed out during the winter of late 1987, so La Nina was already much better established early into the US growing season.

Brace yourselves for this one, London wheat is up this morning. Indeed after opening lower it's turned the market completely and totally on it's head and soared to GBP0.25 higher. It has fallen the best part of an "Ayrton" in the past fortnight mind, so I guess that a bit of consolidation is well overdue.

The pound declining to a 12-day low against the dollar probably had something to do with it too. That came as Fitch ratings described the coalition government's debt challenge that lies ahead "formidable".

OK then, so who is going to be the first one to write that excessive rains might soon be hurting UK and French wheat?

I've made a few tweaks to my global production estimates today, increasing output in the UK, France, Argentina & Ukraine and reducing it slightly in Kazakhstan and Canada.

Heavy rains mean that wheat planting in Brazil's Rio Grande do Sul is well behind schedule with only around 10% of the anticipated acreage so far in the ground.

Farmers there will be carefully weighing up their options as wheat grown in the state is usually followed by soybeans in November. Planting wheat too late could therefore mean missing out on getting second crop soybeans sown.

Local wheat prices are lower than the cost of production, and well below the government-sponsored support level, just as they are for corn and soybeans too.

The question many growers will be asking is whether there will still be any money left in the government's kitty come harvest-time? If not then they'll have to take whatever they can get locally, which is highly unlikely to be showing them any sort of a profit.

July soybeans closed unchanged at USD9.35; July soybean meal closed at USD278.70 up USD1.50; July Soybean oil closed at 36.47, down 31 points. This afternoon's USDA crop progress report showed soybean planting on par with the five year average at 84%. Emergence was 66%, two points above the five year average. In it's first report on crop conditions the USDA rated 75% of the crop as good/excellent and 4% poor/very poor. Continued rain is hampering planting progress in a few states like Missouri and Ohio. Abiove added half a million tonnes to it's Brazilian soybean crop production estimate - now saying 68.4 MMT.

Corn

July corn closed at USD3.35 3/4, down 4 1/4 cents; Dec Corn closed at USD3.55, down 4 1/2 cents. Today's crop progress report showed 94% of the corn crop is emerged, 3 points ahead of the five year average. The corn condition rating stayed the same at 76% good/excellent, the trade had expected a small improvement. Today's USDA export inspections were a little on the low side for corn 31.742m bu. Accumulated exports though are 3 MMT ahead of this time last season at 34.5 MMT. Friday's commitment of traders report showed open interest in corn at 27-week highs. Some of these shorts may be tempted to bank a few profits ahead of Thursday's USDA report.

Wheat

July CBOT wheat closed at USD4.32 1/4, down 3 1/2 cents; July KCBT wheat closed at USD4.62, down 3 cents; July MGEX wheat closed at USD4.86 3/4, down 6 cents. This afternoon's crop progress report showed the US winter wheat harvest at 3% done compared to the five year average of 6%. Winter wheat conditions fell slightly on last week, with top producing state of Kansas interestingly declining 3 percentage points in the good/excellent category. Only time will tell if that is an indicator that stripe rust will have an adverse affect on yield there. The USDA say that 90% of the spring wheat crop is emerged. USDA export inspections were in line with expectations at 14.379m bu, accumulated exports to date lag last year by more than 4 MMT at 21.4 MMT.

EU wheat closed mixed, but mostly lower Monday. November London feed wheat ended down GBP0.85 at GBP101.25/tonne, and November Paris wheat was EUR0.25 easier at EUR139.25/tonne.

Front month London wheat fell sharply to close down GBP3.50 at GBP97.00/tonne. November London wheat threatened to test the GBP100/tonne mark, touching GBP100.50 at one point before recovering slightly.

Good and widespread weekend rains, and plenty more rolling in off the Atlantic as the week wears on, have eased crop concerns in the UK and France considerably.

Even so German analysts F O Licht dropped their 2010/11 EU-27 wheat production estimate by a million tonnes to 141.7 MMT.

UK ex farm prices are now around GBP90/tonne for harvest, fully ten pounds down from their recent highs set only a fortnight ago. Farmer interest at selling at these levels will likely be limited given a drop of that magnitude in such a short time.

Certainly selling will be exceptionally reluctant at anything that starts with an eight.

Paris wheat was underpinned by the euro continuing along it's one way street descent to multi-year lows.

How long has the euro got? Less than five years according to a dozen of the 25 leading City economists that took part in a survey published in the Sunday Bellylaugh yesterday. Eight said it would limp through and five abstained.

One wag went as far as to say it "may not even survive the next week".

It seems fairly well touted that if the single currency can survive, then it won't be within the boundaries of the existing 16 member state set up, with talk of two-tier membership and/or various countries dropping out.

Hungary are the latest country to pop their heads up in urgent need of a slice of the rapidly disappearing rescue cake.

As a preamble to introducing unpopular austerity measures, the new Hungarian government are accusing the old one of lying to the population and markets about the financial state of the country. No surprises there then.

Germany meanwhile seem to be getting more and more hacked off with the irresponsible behaviour of its fellow eurozone members.

Think large block of multi-story flats. Germany have paid up to have the palatial penthouse apartment at the top, the one with the roof terrace jacuzzi and swimming pool. It was a lovely building, until that lot moved in.

Greece and Hungary have completely trashed their smaller ground floor apartments in the style of an ageing rock star, vomiting in the communal areas, throwing televisions out of windows, that sort of thing. And who did THAT in the lift? Germany doesn't know for sure but it has a pretty good idea. They paid for the cleaners to come in and sort it out last time, but it's happening every weekend now.

They're not sure what sort of an operation Spain and Italy are running on the second floor either, but they sure have a lot of gentleman callers.

How Frau Merkel must hanker after a quiet life, relaxing in her lederhosen and gimp mask gently combing her underarm hair in a nice quiet little dungeon in Dusseldorf?

The overnight grains closed mostly a little lower, with beans down around 1-2 cents, corn around 3 cents easier and wheat flat to 2 lower.

There's very little fresh news to start the week, with Hungary doing it's best to retract alarmist comments of defaults over the weekend. The market is unsurprisingly none too convinced with the euro sinking to fresh four year lows against the dollar.

Crude oil is slightly weaker and seems to be comfortable around USD70/barrel for the time being.

The US looks like having a wet fortnight in store, which shouldn't be a problem for newly planted corn, although it won't help get the soybeans in.

The USDA will report tonight on soybean/spring wheat planting progress and also on crop conditions.

Things keep getting worse for Canadian growers after a tornado swept through parts of southern Ontario at the weekend, with officials forced into declaring a state of emergency in the town of Leamington.

Rains have been welcomed in Australia however, although the NAB today lowered their wheat crop estimate for 2010/11 by 400,000 MT to 22.2 MMT.

Early calls for this afternoon's CBOT session: corn called 1 to 3 lower; soybeans called 1 to 3 lower; wheat called mixed.

The word on the streets from sunny Kazakhstan is that despite the intervention of the local Mullah and the slaughtering of assorted small young animals there hasn't been much, if any rain, this past week.

With crops having been sown into a largely dry seedbed, and weekend temperatures of 37-42C, spring wheat there is not going to be getting off to a great start with the crop struggling to emerge and establish.

After another couple of days of wall-to-wall sunshine and temperatures in the mid-20s Sunday saw widespread rain across the UK. With the prospect of more to come this week, UK wheat potential is looking a lot better than just a couple of weeks ago. With the pound still up around the 1.21 mark against the euro that should be sufficient to see London wheat grind a little lower this morning.

The National Australia Bank have cut their wheat production estimate there slightly for the coming season to 22.2 MMT from 22.6 MMT. Barley production will fall 11% to 7.2 MMT as growers shun the grain due to miserable prices. In contrast rapeseed output will increase 13% to 2.15 MMT, they say.

The high Australian dollar is hurting wheat exports which were down 23% to 1.1 MMT in April from 1.43 MMT in March. That's a decrease of 35% on April 2009.

The Chinese wheat harvest is underway say the Ministry of Agriculture, and production is expected to be "slightly higher" than last season they say, through their rose-tinted spectacles. Despite the worst drought in living memory in the south, and a hard winter and prolonged cold spell in the north Chinese wheat production always seems to miraculously pull through and show a slight increase year on year doesn't it?

Is the Egypt/Russia trade spat about to kick off again. One report I am reading this morning (here) says that the north African country has impounded more than 60,000 MT of Russian wheat "over what the local Phytosanitary Committee claims are poor quality standards" without giving too many specifics.

The euro resides at fresh four year lows against the dollar on concerns that Hungary will be the next in line to require multi-billions of loans from fellow Eurozone countries. “It’s clear that the economy is in a very grave situation. It’s not an exaggeration at all to talk about a default,” their PM is quoted as saying.

The US is set for a rather wet couple of weeks, with "the next 16-days are modeled to be extremely wet across many regions," according to QT Weather. That may hamper soybean plantings somewhat which may provide a bit of support. Excessive rains in Canada also warrant keeping a very close eye on as the optimum planting window for spring wheat and rapeseed is rapidly running out.

Algeria has exported it's first barley since the 60's over the weekend with a shipment of 11,000 MT to Tunisia, according to reports. More exports will follow, according to the state grain agency OAIC.

About Me

Worked in agriculture for over 30 years as a shipper, merchant, trader & broker, but still hasn't got the faintest idea what he's talking about.
Likes beer apparently, so why not do the decent thing an hit the donate button you tight bastard?
He can also provide content for your website like market reports and commodity prices. And if you haven't got a website he can design one for you. In short, the man's a bloody genius.

Disclaimer

All comments on this website are the sole opinion of the author, and are not capable of nor intended to constitute professional advice. Neither can Nogger give any guarantee for the accuracy of any of the information or data contained within this site.

The guy is clearly deranged and you should almost certainly ignore everything that he says.